Working remotely has become more common as companies began providing the technology to enable employees to work from anywhere.
Research from Roy Morgan found that in early-2020, at the height of the COVID-19 pandemic shut-down, 32 percent of Australian workers were working from home. This equates to more than 4.3-million people.
It is easier for employees in certain industries to work from home, such as finance and insurance, public administration and defence, and communications.
In contrast, more hands-on industries such as retail, manufacturing, transport and storage and agriculture still require staff to be present in-store.
Available tax deductions
Home office expenses you might be able to claim include:
• Electricity;
• Cleaning costs for your dedicated work area;
• Phone and internet expenses;
• Computer consumables – such as printer paper and ink cartridges;
• Stationery; and
• Home office equipment – including computers, printers, phones, furniture and furnishings.
The Australian Taxation Office provides a complete list of the available deductions and how to calculate each on its website.
Calculating expenses
There are three methods employees can use to calculate their home office expenses.
• Shortcut method: Eighty cents per work hour – only available from March 1, 2020 to June 30, 2021.
• Fixed-rate method: 52 cents per work hour.
• Actual cost method.
But, be careful with home-office expenses. If you include home office expenses in your next tax return, ensure you calculate and apply your deductions correctly.
For example, you can claim the full cost of home office equipment up to $300, but you need to claim the decline in value – depreciation for any items that cost more than $300.
Regardless of the method you use to calculate your expenses, you will need to have records.
You will need to keep receipts for any purchases you have made and a record of relevant utilities and bills.
You will also need to keep a timesheet, roster or diary that shows the hours you have worked from home.
If you can, keep your relevant records and receipts aside and updated throughout the year to save yourself a significant administrative workload at tax time.
Look to a professional
With the range of deductions that might be available to you, plus the different calculation methods for home office expenses, having a registered tax professional prepare your tax return can be worth the investment.
Quite often, your maximised refund will more than cover the cost of having a professional prepare your return.
If you are unsure about the home office deductions you are entitled to, contact an accountant or qualified financial professional for advice.
• The information provided in this article is general in nature only and does not constitute personal financial advice.
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